Romi S.A. (ROMI3) Earnings Call Transcript & Summary

Good morning, and welcome to Indústrias Romi's conference call. We were going to discuss the results for 4Q 2020. Bear in mind, this call is being recorded. It is held in Portuguese with simultaneous translation into English. Slides will be available at the Results Center on our website on www.romi.com/investors. [Operator Instructions] I would also like to clarify that this conference is exclusive for investors and analysts, and that forward-looking statements that are being made in this call in relation to forecast and financial outlooks are mere forecast based on the management expectations in relation to the future of the company. Such expectations are highly related and dependent to market conditions to the country's economic performance as well as the industry and international markets and are therefore subject to change. Today, we have with us Mr. Luiz Cassiano Rosolen, the CEO of Romi Indústrias; and Fábio Taiar, CIRO of Indústrias Romi. The executives are going to begin by presenting the results of the fourth quarter 2020 and will be immediately available afterwards to entertain your questions. I will turn it over to Mr. Luiz Cassiano Rosolen.

Good morning, ladies and gentlemen. Thank you very much for attending the fourth quarter 2020 earnings release for Indústrias Romi. After a strong recovery noted in the previous quarter, the fourth quarter remained solid, with growth in revenue and margins and an important evolution in the order entry. We have had a robust backlog therefore in 2021. The machine unit has had a positive order entry, which has had a positive impact in margins and revenues. The success of new products, which are essential to leverage productivity and competitiveness for our customer has a low interest rate, favorable foreign exchange and positive impact in capital goods, therefore, consolidating the recovery of the national manufacturing industry. In the Rough and Machined Cast Iron Parts Unit, we've maintained solid revenues and margins when compared to the previous quarter with also important order entry for heavy parts and also other sectors as automotive, agriculture, earthmoving industry and also the market recovery, which has been noted since the third quarter. Our operations in Germany, Burkhardt + Weber business unit has reported a margin growth for 2020 when compared with 2019, even with lower revenue in euros. Challenges for 2021 are huge. Therefore, we have made progress in the third quarter, which has been very important for our backlog. And this was a result of the improvement in the Asian market and the beginning of the recovery in the European market. With the pandemic, our key objective in 2020 and now 2021 are still to protect our main asset, Romi team, their families and our business partners. With this in mind, we have implemented restrictive measures to continue operating and meeting the needs of our clients. I would like to conclude by thanking all of our stakeholders for their support, clients, shareholders, stakeholders and all of the community. I have special thank you to our Romi team. I would like to express my gratitude for their cooperation and resilience and we've, therefore, attained amazing results in 2020. In 2021, we are confident that we will capture new opportunities, and we will execute with excellence our results. I will now turn the floor to Fábio, who will share the results for the fourth quarter 2020. Welcome, Fábio.

Thank you, Cassiano. Good morning to everyone, and thank you for participating in our fourth quarter 2020 earnings release conference call. I will actually walk you through our presentation. And by the end of the presentation, we will have a Q&A session. So beginning on Slide #3, where we have the highlights for the quarter. We have included the following: the record revenues for the fourth quarter, BRL 361 million, roughly with a 56.5% growth in relation to the fourth quarter, third quarter -- sorry, fourth quarter 2019. The revenue growth actually was in all the business units of Romi. The incoming orders in the fourth quarter 2020 totaled BRL 390 million, 110.6% increase over 4Q '19. I would also like to point out that we had an important growth in all business units. In Romi Machines, we had a substantial growth. As we had mentioned earlier, we had observed a recovery, especially starting in June 2020 with new opportunities and conversion with concrete orders, order entries. And this was also driven by 2 key aspects: one being new scenario with very low interest rates that were unprecedented. And this actually calls for resources to be driven to investments and also the exchange rate, the appreciated real, which gave us more competitiveness to the local manufacturing industry and driving further investments. B+W in 2020 and by September approximately had a low order entry level. As we are well aware, B+W is exposed to the Asian market, especially China, where the pandemic began. It began in China and then reached Europe, where it also has a significant part of its revenues and, therefore, it had a negative impact throughout 2020. However, in the fourth quarter, we see an entry order of BRL 100 million. Therefore, these were the orders that we talked about in our last call, indicating a recovery first of the Asian market and also recovery and improvement in the European continent. And finally, we have also had growth in Romi Machines and Rough and Machined Cast Iron Parts. The wind power market also accounted for an important growth in parts and other segments, such as buses and agriculture machines. And therefore, we saw an increase in orders, mainly by the end of 2020. Even considering a record revenue in the fourth quarter with this strong entry order, by the end of the year, we had a solid backlog with over BRL 500 million when compared to 31 December 2019, 67.2% growth, meaning, we started 2021 with a very solid backlog. And now I'd like to talk about our results in different business units, the first one being Romi Machines business unit. We had an operating revenue in the 4Q 2020 of 37% higher than in the fourth quarter 2019 as a result of the resumption of orders from June 2020 aforementioned. This increase in revenue, therefore, led to, well, more orders, higher order entry. We've had all the materials and components delivered in due time and we also met the deadlines with our clients. In terms of operating margin, the growth in revenues and the operating control costs also allowed for an important evolution in our operating margin, which grew compared to the fourth quarter in 2019 by 10.1 percentage points. In the Rough and Machined Cast Iron Parts Unit, the net operating revenue was even higher, 102.3%. And I should mention that in wind power, wind power had been placing orders since mid-2019. However, the deliveries began to happen more consistently in early 2020. And this is one of the reasons for the revenue growth and in the other segments. In this business unit, as aforementioned, mostly starting at the end of the third quarter, early fourth quarter, well, the entry levels began to rise again, going back to the levels before the pandemic, which also account for a strong fourth quarter in sales and revenues. And also with the operating efficiency, the business unit had a higher operating margin of 2.2 percentage points. And on the next slide, we have more highlights. Incoming orders at the Romi Machines Unit in fourth quarter 2020 was increased by 87.5% compared to 4Q '19. As mentioned, thanks to the current environment with lower interest rates and a competitive exchange rate driving investments in new machines and equipment. In Rough and Machined Cast Iron Parts, we also had important incoming orders, 75.7%. And here, energy -- the energy industry also maintained a strong demand, which started in 2019. And we also saw the recovery of other segments as commercial, automotive, agricultural machines and earthmoving segments. In B+W, as also mentioned, the fourth quarter also had an important recovery in incoming orders. They reached lower levels in the third quarter. But in the fourth quarter, they reached BRL 99.3 million, an expressive growth compared to the fourth quarter 2019. And we should say that the main reason of origin was the Asian continent. As for our backlog, there was also an important growth compared to December 2019. This gives us a positive outlook for early 2021. It's also important to mention that we've also observed that our shares, ROMI3 is now part of 3 new indexes with the improvement of liquidity, mainly as of the second half of 2020. So starting on January 1, the first working day for January 2021, we were included in IBRA, the Brazil Broad Index; IDIV, Dividend Index; the Small Cap Index; and the Trade Corporate Governance Index, IGCT, for companies that have a certain level of liquidity. This was also a major achievement for the company. And finally, in 2020, we also actually had many opportunities that were seized in terms of net cash volume and the raw materials and components that were obtained. We met all of the deadlines with our clients. And we also were able to keep this in cash through receivables and through the improvement of the turnover of stocks of our inventory by better using our working capital and, therefore, finished the year with net cash totaling BRL 110.5 million. The only unusual impact we've had that year was mainly process we had with compulsory loans for Eletrobras, which was concluded by the end of 2020, which impacted our cash in BRL 37.5 million. However, all the cash generation, the remainder for 2020 resulted from the operation itself. On the next slide, Slide 4, we have the conjunctural indicators and the industrial indicators, our GDP and FBKF. For the third quarter in 2020, we'll still have a strong impact of the pandemic. Still if we move to Slide 5 -- we jump to Slide 5 with the economic indicators. We can see that the capacity usage while suffered, of course, the height of the pandemic, but still, there was a recovery. And over the past 5 months of last year, it went back to the 2014 levels. If we look at 2015, '16, '17 and '18 and 2019, this had not gone back to the 2014 levels. Maybe that was the last year when manufacturing -- we had our peak in manufacturing activity. We concluded the year slightly above 2014, which indicates a positive outlook in terms of capacity, usage and the new investments that are to be made in new sectors. And there is another index that we look at closely, which measures the mood and trust of investors, just as we look at capacity at the peak of the pandemic. Well, this was hit hard. However, there was a recovery. And over the last months, it remains at around 60.9, 62.5 points, meaning that we have a positive outlook and trust in terms of new investments. And here, looking at our business units in machines, Romi Machines and Rough and Machined Cast Iron Parts, we have as the highlights in 2020 for Romi Machines business unit, the agricultural segment with excellent performance. We captured opportunities here and we're able to support our clients in this segment, packing -- well, we use machines, injector machines heavily here in this segment. We have online and delivery, which are important and made an important comeback -- a strong comeback. We were able to capture opportunities here. And the other segments remained stable compared to 2019. So these are the key highlights. Under B+W, the B+W business unit, this is a niche business. It has a higher concentration in certain segments. In 2020, the segments served well, remained the same, traditional segments and machines and equipments, automotive and motors and systems. Despite the fact it was a difficult year, 2020 for aerospace segment, the applications were developed over the past 3 years for the segment. We still received orders for the aerospace segment in 2020. And in the Rough and Machined Cast Iron Parts business unit, the highlights are the recovery of the wind power segment, which represents 53%. Now this business unit revenue, and as mentioned, the entry orders began to come in, in mid-2019, and we began to deliver the products more consistently in early 2020. And throughout the year, this demand was maintained consistent for products in this segment, resulting in 53% of revenues for Rough and Machined Cast Iron Parts business unit. The other segments, although they might have lost their representativeness or percentage as a result of the more expressive growth of the energy segment, well, that was a result of the growth of the wind power and energy segment than an absolute drop. And as mentioned, by the end, of the third quarter, we began to see a recovery, an important recovery of the other 3 business segments. On Slide 7, we have the net sales per business unit. Romi Machines in 2019 accounted for 51% of consolidated revenues and represents 47% in 2020. There was an absolute growth in this unit. However, since the Rough and Machined Cast Iron Parts had a higher growth, you had this lower growth in Romi Machines, just as B+W. In euros, the revenues in euros fell 13.8%. But with the depreciation of the real in relation to the euro from 2020 to 2019, it grew in revenues in reals with a different proportion of the other business units. Therefore, it lost some growth potential with consolidated revenues. Net operating sales. And here in sales distribution, geographically, Brazil grew more than in 2019, going from 56% in net sales in 2019 to 60%, mainly because you had more growth in Rough and Machined Cast Iron Parts. And the revenues here are mostly for the domestic market. And in the Romi Machines business unit, you had a recovery that was faster in the domestic market than in the international, the foreign market, resulting in a higher growth in net sales and consolidated sales in Brazil. As a consequence, there was a reduction, a decrease in the other regions, such as Europe, for instance, which went from 31% to 25%. Latin America was -- remained flat. It's important to mention that Latin America, as we saw also Brazil, was -- went through an important recovery recently. In the United States, we had also flat levels and the other deliverables in B+W here in Asia 2020. On Slide #9, we have the order entry and backlog. As mentioned, in the highlights that here, we can delve into the figures, growing from BRL 111 million to BRL 208 million, and this represents an important growth, 87.5% throughout the year. Romi Machines had an expressive growth in order entry of roughly 60%. And this was all, of course, caused by the recovery of the business segment. In the domestic market, the interest rate was lower, as mentioned. The exchange rate also giving us more competitiveness and, therefore, driving investments throughout 2020. And B+W, as mentioned, in this quarter also had an important business volumes totaling BRL 99 million, with the 264.6% growth in relation to the fourth quarter 2019. And throughout the year, it was somewhat lower than last year caused by the exchange rate in euros. The depreciation is somewhat higher because in the first months of the year, B+W had not placed orders. However, in the fourth quarter, as mentioned, there's an important volume. And we can, therefore, look at a more significant and robust backlog for 2021. And in Rough and Machined Cast Iron Parts, had a good fourth quarter and entry orders, 75% growth compared to the fourth quarter 2019 throughout the year also with a 51.8% growth with continued entry orders in the energy segment and also the recovery of the other segments, mainly towards the end of 2020. So the total backlog or order entry for 2020 surpassed 110.6% volumes of the fourth quarter of 2019. 2020 will total 1 million -- BRL 73 million or 45% above -- higher than the results registered in 2019. This growth in volume and this growth in order entries allowed for a strong fourth quarter in terms of revenues. And we concluded the year 2020 with a robust backlog, BRL 510 million, 67% above December 2019. And here, the highlights for this segment in Romi Machines, well, of course, accounting for the domestic market growth, 73% above December 2019. And similarly, we had the same here for the Machined Cast Iron Parts above December 2019. On Slide #10, we have the cost of goods sold. Structure despite the challenges throughout 2020 resulting from the pandemic, we were able to find alternatives to address those challenges and to maintain our competitiveness in the cost of goods sold. In materials, of course, there was a slight rise, a 2 points growth, 1% point roughly with the inflation, especially because at around 30%, 35% of our cost is indexed to the exchange rate, the foreign exchange rate, but the other results came from, of course, the operating efficiency. And of course, as a result, we had labor cost, depreciation and manufacturing expenses. These were diluted throughout 2020. And therefore, there is a positive impact in operating margins as we will see on the next slide. On Slide #11, we have our profitability results. In the fourth quarter, we had an evolution in gross margins compared to 2019. The 3 business units actually evolved, grew. And with higher revenue, the gross profit also grew. And this increase in revenues -- and gross revenues and margin -- gross profit and margin together with strict controls and operating expenses also allowed for this important expansion and growth in operating margin. In fourth quarter 2019, this operating margin totaled 16.5%. And here, we have already looked at all the effects and gains in relation to taxes, Eletrobras and we are looking, in fact, at the results of the operation alone. So it was a solid and strong results for the quarter. And the gross margin also had a significant growth, as we will see in the further slides. The 3 business units had gross margin growth, and we had a 27.1% annual growth, which allowed for the growth in gross profit. And together with the strict controls with the operating expenses resulted in a substantial growth of our operating profit with going from 3.9% to 10.9% in operating margin growth. And looking at Slide #12, still on profitability, looking at EBITDA and EBIT. EBITDA was positive in the fourth quarter 2020, reaching BRL 69 million and 19.3% margin, quite higher than what we observed in the fourth quarter 2019 for the same reasons mentioned earlier, growth in revenues, in gross margin, strict control of operating expenses, allowing for this growth in EBITDA margin. And finally here and still in net income with important growth compared to 4Q '19, going from BRL 19 million to BRL 49 million. In terms of margins, 8.3%, jumping to 13.6% in net margin in the 4Q '20. Once again, looking at the recurring results of the company annual margin, EBITDA also grew exponentially, growing from BRL 63.7 million to BRL 143 million. In terms of margin, 8.3% jumping to 14.7%, one of the best EBITDAs we've had over the last decade. In terms of net income, it's also expressive, going from BRL 28.5 million to BRL 101.3 million. Net margin by the end of 2020 of 10.4%. And moving now to Slide #13. We have the business units' results. So Romi Machines, as mentioned, with growth in operating revenues, operating sales, especially resulting from new businesses in the domestic market. We grew our gross margin, the higher volume of operations of exports as well and also expenses control allowing for higher volumes and evolution in gross margin, leading to higher EBITDA growth. And by the end of the year, the EBITDA margin was 21.7%, which is substantial for this business unit. B+W in real, revenue growth compared to 2019, higher than the conversion of revenues because we had the depreciation of the real in relation to euros. In euros, there was a drop of 13.8% in the same period. Still despite this -- the revenues -- lower revenues in euros with all the projects that we have talked about, new pricing structures and new controls in operating efficiency and reducing expenses, improving gross margins, as a consequence, we reduced operating expenses and, therefore, we're able to have an improved EBITDA margin despite the lower revenues in euros in 2020 compared to 2019. And finally, in Rough and Machined Cast Iron Parts, yes, we had an increase, the highest increase in revenues. It now represents 26% of the consolidated revenues of 2020, almost BRL 100 million growth in the operating -- net operating revenue, mainly resulting from the energy segment and with a higher volume in manufacturing and production. And this unit is capital-intensive and, therefore, allowed for higher dilution with an important operating efficiency in 2020 accounting for this important growth in gross margin, 9.3% to 20.1%. And we observed the same in EBITDA margin, 2.9% jumping to 11.5%. On Slide #14, we can see the cash position. And on the illustration, we can view the evolution, intensive cash generation in 2020 with an improved operating results. The EBITDA over that year was higher than last year's, the previous year, and the working capital was also used in a positive way with improved working capital and controlled debt default. Nonrecurring as we see here, BRL 37.5 million resulting from the compulsory loans with Eletrobras. And also -- we can also see that most of the cash generation in 2020 resulted, in fact, from the recurring operation. We concluded the year with BRL 22.6 million, net debt BRL 212.1 million, totaling net cash BRL 107 million. And the debt volume that is to be paid throughout 2021, however, we have enough cash to pay our debt. And here on share performance, Slide #16. Well, our share performance was far above that of the index. Over the past 3 years, our performance has been improving since 2017 year-over-year, generating cash. In 2020, we had cash generation, the operating results higher than the previous years, indicating a consistent recovery, causing our shares to perform in a very positive way. And once again, here, this is important to note, liquidity in gray, share liquidity, especially starting the second half -- as of the second half last year, liquidity has improved month-over-month. And in January, therefore, we -- well, I mentioned the 4 indexes that we were included in. We have now been included in the 4 indexes, and this brings more liquidity to our shares. And as I mentioned, they have evolved over the second half of 2020. Well, and with this, we conclude the presentation, and we will now move on to the Q&A session and entertain your questions. Thank you for your participation once again.

[Operator Instructions] We have one question from [ André Santana ].

If we can talk about the new products that were launched by Romi and how they were received by the market?

We've launched new products in the Romi Machines unit, the new generations in the machining and lathing centers. We've had an important technological upgrade in these units in terms of thermal processing, connectivity and new control systems that are cutting edge that were developed with our partners. And these are 2 different machine generations, 2 product lines that are actually quite successful in the market, in the segment that have ramped up our productivity and have brought more accuracy to our process. And this is what we do every day. We are constantly searching for breakthroughs, for new cutting-edge solutions over the last years. Our strategy was not to grow our catalog, but rather to enhance all the things that we already do and have to bring more quality to our products. And these are the first 2 actions of many others that we are working on to bring breakthrough technology to our clients. Thank you.

We have another question from [ Mathias, Beatrice ].

Congratulations on the 2020 results. In terms of machine rentals, can you say how much of the revenues result from this area? And what are the margins, the rental margins in regards to equipment sales?

Thank you, [ Mathias ], and thank you on behalf of all the team. Well, as for the revenues in machine rentals, this is under Romi Machines business unit. This is not still listed as materials, but it is growing. And we do believe that not only as a new product, machine rental, machine leasing can also become an important value chain for our clients. Romi Machine rental, well, this is something we do for a determined period of time. And we are extremely careful with the -- when it comes to the machine uptime for our clients. They will use the necessary levels of the machine with the right adjustments. So if -- they will only actually pay for what they will use for their actual need, and this is a model that we have adopted and that has been working. It has been successful. It has exceeded our expectations. It's something that is reflected in our CapEx because we mobilize these machines. More than half of the CapEx is machine mobilization, machines that are under rental that have been rented. We believe the margins fall within our expectations and are pretty much in line with our expectations in terms of returns of the assets we are renting.

We have one more question from [ Roberto Cleto ] from FourOne Investments.

Congratulations, Fábio, on the results. We see you have a solid backlog for 2021 in Romi Machines. How many machines do you believe you can deliver in 2021?

Thank you for your question. And on behalf of the Romi team, we thank you commending us. Yes, we have a strong backlog and entry order in the fourth quarter 2020 with higher revenues and solid backlog in 2021. We don't have a guidance for 2021. And the reason for that is that when it comes to our capital gains, there might be fluctuations as a result of the fixed capital results. There were years where we delivered over 2,000 machines. There were years where we delivered 400 machines. So this fluctuation will heavily depend on the market scenario. We are quite optimistic. The first months of the year are going well. We have a positive outlook, but it will all depend on the interest rates to remain low. And of course, for the country to continue growing, we need to have the installed capacity to leverage sales even further in 2021.

The second question, in 2020 with judicial lawsuits, you had payouts at around 50%. Do you think we can expect payout at around 50% or lower than that?

Of course, lawsuits caused us to have positive cash generation with Eletrobras. We have an important cash generation with the Plano Verão, the summer plan. In 2020, we've also been having an important cash generation with the credits that we have. And as we have cash generation, we will do the payout. It is difficult to predict the payout for 2021, but without a doubt, with the nonrecurring items, they will no longer exist. There might be new items that will arise. We do not know now. But as we have good positive cash generation, it may be either used for this purpose or we might find other investments that will bring higher returns for our shareholders. We have many different projects. We are definitely looking at the best possible format of payout to our shareholders.

We have one question from [ Rafael Rolin ] from Santander.

Fábio, congratulations on the presentation. I'd like to understand how actually default behaved throughout 2020 and if there were relevant impacts.

Thank you very much for your question. We started out 2019 with low default rates. With the pandemic, we focused strongly on this area to -- we looked very closely at all of our customers to try and understand their needs. We had negotiations like with the deals with the BNDES for the emergency actions. We would have an extended payment period for some clients according to that agreement. And we, therefore, adopted that program with some of our clients looking at, of course, after conducting a credit analysis, a credit assessment. But throughout 2020, we observed pretty much controlled insolvency or default. If you look at our financial results, the levels and provisions -- loss provisions were below those of the previous years. Therefore, I think we can say we worked very closely with our customers. Our sales area, our commercial area worked very closely with clients. And the default levels were quite low by the end of 2020, which was also instrumental for cash generation, the cash generation we just showed you.

Mathias, Beatrice has one more question.

The dividend payout is carried out with exceeding cash. Does the company consider new acquisitions?

Well, the dividend payout, dividend distribution depends on cash allocation, as mentioned earlier. So for example, in 2020, we decided to allocate cash in machine allocation operations. And we've had positive results, as mentioned, somewhat better than expected. And as we have new investments and businesses coming up, we might consider doing cash allocation. It's important to mention that we want to add value to shareholders. And if we can use exceeding cash, yes, we will do the payout, just as we did in 2020.

The second question is from [ Pedro Henrique Nicolini ].

Congratulations on your results or pricing. I'd like to know in the Rough and Machined Cast Iron Parts, what has driven demand for this unit? What would you say will surprise you throughout 2021?

[ Pedro ], thank you for your comments. In Rough and Machined Cast Iron Parts Unit, in 2021, we had solid results in energy and in heavy parts. And it has remained solid throughout '21 with our traditional clients in this segment. And the other segments, mainly trucks and buses and earthmoving machines as well as agricultural machines, the 3 key segments, well, they were very strong at the end of the fourth quarter. The revenues for this business unit, which is normally not so strong in the 3 segments, I've mentioned, automotive trucks, earthmoving and agriculture machines because you normally have the downtime for the holidays. This year, there was no -- there was no downtime or drop. They remained very strong in the fourth quarter. And so far, we've been having a growing demand in this sector also related to capital goods. And Romi also, of course, is requesting -- demanding a ramp-up in production from Rough and Machined Cast Iron Parts Unit.

We have one more question from [ Rafael ] of Santander.

Was there an impact with shortage of raw materials? What is your perspective with the partnership with ROBODRILL?

Raw materials, well, we've -- we didn't have an impact. Some of our clients had an impact, especially in packing, the packing and plastic machines -- plastic processing machine segment. However, they are recovering now, getting back to normal levels with raw materials and in steel -- and the steel segment as well. But it's also going back to normal. The shortage is -- well, coming back to normal levels, and they have been able to address this issue because, yes, the recovery was also very strong for them. This partnership with ROBODRILL is very important for us and is an important partner in electronics and, of course, a renowned company, a Japanese company, a major global player. And with ROBODRILL, we expect, of course, to meet the needs of an additional group of clients. They do the topping center application, a machine that Romi does not have in its portfolio and that can complement our portfolio extremely well so we can actually meet our clients' needs in this particular niche.

We have one more question from [ Pedro Henrique Nicolini ].

Can you also talk about the foreign exchange rate factor in the sector and if that is linked to the backlog?

Well, the exchange rate to us is important, is key -- a key factor because of low interest rate. Usually, of course, depreciates -- causes the exchange rate to depreciate as we observed this year in our country. And that drives competitiveness in the industry. There's more appetite for investment, low interest -- with low interest rates. We will observe capital migration from the financial to the manufacturing sector -- industry, expecting higher results. And therefore, our clients might consider acquiring machines to ramp up production or to update or enhance their productivity system. And the exchange rate plays an important role in a positive way. It's -- it brings more competitive edge to our clients. You have spare parts that are national. And they have more competitiveness to export. And these are positive factors for the domestic industry. You have the interest rate to -- for your loans, and the exchange rate will give you competitive edge. It's an important factor when it comes to capital goods, the segment where we operate. And in terms of backlog, in the B+W business unit, you have translation from the euro to the real. The backlog has to be complemented throughout 2021 for B+W to attain the results we expect for 2021 in B+W. But we are optimistic the number of projects and consultations are good for 2021. We've signed interesting deals in January, February, and we will continue to pursue this target for 2021. And in the case of Romi Machines and Rough and Machined Cast Iron Parts Units, we have our portfolio in reals.

I think we have a question from [ Roberto Cleto ] from FourOne Investments.

Do you believe the demand for Rough and Machined Cast Iron Parts from the wind power segment will be maintained in the mid-run? Or was 2020 in a typical number?

Well, it's hard to tell. It's hard to predict what might happen with the wind power segment. However, we are quite optimistic in regards to the segment because, as we all know, the wind power segment is very competitive when it comes to energy generation. And we believe that the energy grid in Brazil will use more wind power energy. It will grow continuously, and the cost is quite competitive. And therefore, we should see continued growth in the segment in the mid and long term. Of course, you have the auctions, the government auctions. However, if the economy is good, if the country continues to grow with low interest rates, this segment will continue to grow over the next years. However, it is hard to tell at this point in time if there might be meaningful changes over the next years, significant impact. But by the talks we've had with our clients, they're quite optimistic. They've been investing and growing their supply chain in their manufacturing plants.

[Operator Instructions]

[ Ator Morais ]. Congratulations on your results. So you -- you just say that the exchange rate has given the new competitive edge in Brazil in relation to imported goods. Can you share more market share data for the third quarter in Brazil?

Well, we do not have market share data for Brazil, actually, because this is a different sector. We do not have a clear view for market share. Independently, we do calculate our own market share. What we'd do is to track that, but I am not going to share that because it's something we do internally. It's independent -- an independent assessment. I can say that the exchange rate has given a competitive advantage to Romi in relation to imported machines. However, machines themselves -- well, the price factor is an important factor. However, it's not the most important factor. Romi, when the exchange rate -- when the real was more appreciated, we had a very robust market position. It was quite robust. We didn't have strong fluctuations in market share because the machine uptime is what matters the most to clients. The Romi's infrastructure, the capacity to manufacture their products and to react to our customers' needs and to meet their needs, to support our clients, that's extremely valuable value chain we have. And the exchange rate, in my opinion, yes, made the national industry more competitive, both in the production of national parts. And this has been positive for Romi and other capital goods businesses as well. So the national industry growth, manufacturing industry growth has been positive, 12 players and has been driving substantial part of our demand.

On the general results, any additional information about dividend payout or shareholder payout?

No. We had a Board meeting. We didn't have a payout. This is a decision that is taken throughout the year during our Board meetings. But we did have a relevant payout in December, which was paid in January this year.

[ Roberto Cleto ]. Can you talk about the new possible investment projects you have in your pipeline?

We are strongly focused on new projects. Rental -- machine rental is something we want to boost in 2021, and it has been publicly advised. We have other projects that are not public. And as we actually make further decisions, we will be sharing those results with our shareholders. We have a new business unit that was set up recently that focuses on new projects.

[ Claudio Travisa ]. Congratulations on the results. How can Romi be affected and be prepared, considering a possible higher interest rate in 2021, 2022?

Well, if we have higher interest rates and if that is something good and positive for the country, it will be welcome. Ideally, of course, we would like to see a low interest rate maintain in the market to track investments. But Romi has attained positive results despite high interest rates in the past, and I do believe that lower interest rates, yes, well of course, faster, better results. It all depends on the increase of the interest rates. Our clients, of course, might have projects that will have 15% yield or returns and will remain competitive. If interest rates -- well, looking at historical levels, go to 14%, 15% as in the distant past, then, well, we will, once again, see capital migrate from the productive to the financial sector and to benefit from the higher interest rates there and their yields.

We have 3 questions related to capacity from [ Graciela Borges ].

Congratulations on the results. You have the diverse demand. What is the idle capacity now and the production capacity for this year and considering the 2021 CapEx? [ Rafael ] has a question about the installed capacity. If it can meet the demand? And [ Pedro ] asks about the installed capacity of Romi and about the maximum installed capacity at the plants to meet the demands of the current orders.

So I can answer these 3 questions. Now CapEx 2021, we have not disclosed our 2021 CapEx. It's mostly going to be used for machine allocation. As for capacity, we have optimized our capacity in the fourth quarter in Machined Cast Iron plant. We believe, will reach most of our capacity throughout 2021. We might have to make further investments. However, nonsignificant investments to enhance capacity in Romi Machines business unit. Investments are usually made to enhance productivity to modernize our machines because our installed capacity is very robust. We actually manufactured over 2,000 machines. So we are still using our capacity, and we're using 40% of our capacity at the moment. So we do not expect to have major investments in Romi Machines and neither in B+W in 2021. No major investments because they're not using their total capacity. They're using 60% to 70% of their capacity.

Two last questions.

In the B+W business unit, they had a drop in the EBITDA margins from 2013 to 2020, as we heard in the presentation. What was the reason for that? And how can that be better controlled from [ Nathan Feffer ] and [ Guilherme Frin ] from Loyal Investments, also congratulates us for the results. The margins have been falling since 2013 in B+W. Can we expect improvements for over the next years at B+W?

We are working strongly to enhance B+W. We've had cost reduction projects that started in 2020, and there is synergy that we've gained with Brazil. We're implementing projects in our manufacturing plants. And also Romi Machines, where we have the frames for the new line that we developed together with Germany -- Brazil, Germany partnership. All of these actions -- we believe all of these actions will produce results and improve B+W margins. Of course, it will also depend on their volumes on B+W. Of course, ramping up volume over the next years for 2021, we believe volumes will be more in line with last year's volumes might be somewhat more difficult depending on the orders that will come in, but we are working strongly to capture more synergy and therefore, grow B+W's margins. And I would say that, yes, the team is doing an excellent job. It's a joint effort between Brazil and Germany. And over time, we will see improvements. We should bear in mind, B+W has a long production cycle. Their orders are special. Sometimes you have to look at a 15-year -- 15-month period, we have orders for 2022. So depending on the complexity levels, it might be a 15-month period for the delivery. So we have a lot of engineering efforts before manufacturing. So depending on the machine, it's a 12- to 15-month period for delivery. So this is how the operation works, and that is why the margin increases more gradual, so to speak.

Excuse us. Since there are no further questions, I would like to give the floor to Mr. Luiz Cassiano for his final remarks. The Investor Relations Department of Romi is available to take more questions. Mr. Luiz Cassiano has the floor, please.

I would like to thank everyone for participating in the fourth quarter 2020 conference call. Our team will be available to take further questions from you, and I wish you all an excellent day.

Romi Indústrias' teleconference is now adjourned. Thank you all for your participation, and have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]